NEW YORK — Wall Street shook off early losses and extended its big rally Friday as investors grew more confident about an economic revival that has yet to become apparent.
Analysts were encouraged by the upturn, because they'd expected a sell-off following the market's rally Thursday, when the Dow industrials gained 237 points and the NASDAQ composite index climbed 103. With little positive news about earnings and the economy, investors have limited many buying sprees to one day at a time. Friday was the third straight day of gains for the Dow and NASDAQ.
"This is just a darn good follow-through to big gains," said Scott Bleier, chief investment strategist at Prime Charter Ltd.
The Dow Jones industrial average closed Friday up 60.07 at 10,539.06, after falling as much as 46 in early trading. For the week, the Dow gained 286.38, or 2.8 percent.
The broader market also finished higher Friday and posted weekly gains. The NASDAQ rose 9.05 to 2,084.79 Friday and ended the week up 80.63, or 4.0 percent.
Wall Street's broadest measure, the Standard & Poor's 500 index, advanced 7.54 to 1,215.68 on Friday. The S&P's weekly gain came to 25.09, an increase of 2.1 percent.
While Friday's session lacked any noteworthy earnings news, the market had three positive economic reports in its favor Friday. The Labor Department said its producer price index, which measures inflation before it reaches the consumer, fell 0.4 percent in June, the first decline since last August.
A second report showed retail sales rose 0.2 percent in June, bumped up by strong sales of new cars. The reading was slightly lower than analysts were expecting.
Meanwhile, the University of Michigan's mid-month report on consumer sentiment for July reportedly showed an increase to 93.7 from 92.6 in June.
As the outlook for the economy improves, analysts expect the market to gradually head higher.
"The market's going to rally when the worst looks like it's over and people get confident that they can buy now and not lose a lot of money," said John Forelli, portfolio manager for the John Hancock Core Value Fund.
Friday's positive economic data helped boost consumer cyclical stocks, which tend to move up and down with the economy. Caterpillar climbed 58 cents to $52.48, while Ford rose 34 cents to $25.60.
But the retailing sector was mixed, with sales and earnings reports ruling the direction of certain stocks.
Investors punished Toys R Us, sending it down 35 cents to $24.80 after the retailer warned its second-quarter loss will be larger than expected. Wal-Mart rose $1.05 to $52.90, boosted by a report Thursday that sales from stores open at least a year rose 6.9 percent, well above expectations.
The market had to work hard for its gains. Volume was lighter than normal, a sign that investors were trading cautiously. Consolidated volume on the New York Stock Exchange came to 1.31 billion shares, below the 1.61 billion traded Thursday.
Investors "don't want to be faked again," Bleier said, referring to recent rallies that have ended as companies issued worse-than-expected earnings or warned of lower profits in the future.
Overall, the market's gains were spread across a variety of sectors, including riskier and safer issues. Cisco Systems rose 88 cents to $18.74, while Pfizer advanced 83 cents to $38.43.
With more than 720 companies having issued second-quarter profit warnings, analysts say investors are now more concerned about what businesses have to say about the future.
Chip maker Advanced Micro Devices proved that theory, falling $1.62 to $21.08. Late Thursday, AMD said it barely beat Wall Street's dramatically lowered second-quarter earnings but also gave a grim outlook for the current quarter.
Advancing issues outnumbered decliners nearly 3 to 2 on the NYSE.
The Russell 2000 index, which tracks the performance of smaller company stocks, rose 1.67 to 490.71. It ended the week up 7.45, or 1.5 percent.
Overseas markets were mixed Friday. Japan's Nikkei stock ended the day down 0.3 percent. But Germany's DAX index rose 0.9 percent, Britain's FT-SE 100 advanced 1.0 percent, and France's CAC-40 gained 1.3 percent.